The TSA: Linkages of government finances and the present fuel scarcity

As I write this piece and start a very important conversation, I find myself in a somewhat precarious situation. First, I am a member of the House of Representatives and as far as Nigerians are concerned, a part of this government who should take credit or blame for the situation we find ourselves (irrespective of […]

As I write this piece and start a very important conversation, I find myself in a somewhat precarious situation. First, I am a member of the House of Representatives and as far as Nigerians are concerned, a part of this government who should take credit or blame for the situation we find ourselves (irrespective of my job function which is oversight and not execution). 

Secondly, I am part of the ruling party which has a majority in both Houses of the National Assembly and thirdly, as a retired banker who rose to the highest levels and have engaged copiously with various MDAs of government in the course of my career in the private sector.

A lot of readers will ask, so what do you have to say, it is you and your ilk that have put us where we find ourselves today. I ask for your indulgence while I try to clarify some very important issues.

A further fourth point in addition to the above is that I currently serve as the Chairman on the Ad-hoc Committee on the implementation of the TSA, the FGNs flagship policy on good governance and transparency of FGs finances.

Now to the core issue at hand, our government must realise the importance of informing the citizens on a timely basis, showing the accurate financial figures available to enhance transparency.

As Chairman of the TSA operations committee, I have made numerous discoveries and realised that there is a huge misconception of the public with regards to revenue inflows and how much is actually available to fund the expenditures of the Federal Government.    

The basis of the creation of the Ad-hoc Committee on the TSA was the declaration by the Minister of Finance, in 2016, that N2.9 trillion had accrued to the TSA in just a few months of implementation. Nigerians immediately picked this figure (Which is about $9.5 billion) and asked questions on why is government now facing budget financing challenges when this policy had brought in so much so soon?

This is where the transparency aspect comes in. A majority of these revenue inflows are for the operations and general overheads of specific MDAs set up by government to perform specific functions. All these inflows are characterised according to guidelines issued by the Office of the Accountant-General, under the Ministry of Finance.

Federal Government ‘income’ on these funds is based on an agreed percentage of the operating surpluses of such organisations which is basically the balances on their incomes over expenditures.

The NNPC, according the federal budget for 2017, is expected to contribute the sum of N330 billion by way of operational surplus contributions to the Consolidated Revenue Fund of the Federal Government to fund the budget. As at October 2017, not a penny has been contributed by the NNPC in this regard. This occurs even though the NNPC actually forms the bulk of the inflows into the TSA.

It is pertinent to note that MDAs used to argue on the time of paying operational surpluses and insisted on payment after publishing of their audited accounts. 

It was to counter this that the TSA was formed. With the TSA, as revenue inflows come in to MDAs, the FG issued a circular limiting their expenditures to 75% of their income leaving 25% to be retained by the FG for funding of the independent revenue component of the Federal budget.

My Committee understood the importance of this to FGN cash flows.

Now, with the present fuel scarcity experienced in the country, and claims and counter claims by the NNPC and independent marketers about the landing cost of PMS in the country, firstly we are still clearly net importers of products and secondly it is clear that there is a loss being carried on every litre of PMS sold in Nigeria.

By simple mathematics, this loss is being absorbed by somebody, either the FGN itself directly or through an MDA of the FGN.

As I said earlier N330 billion is expected from the NNPC as FGN independent revenue in 2017, but clearly the NNPC has taken the losses incurred in fuel importation and distribution as an operational cost (or expense) giving a net position incapable of paying a surplus to the Federal Government.

An important question we need to ask is has NNPCs capability to pay an operational surplus this year? The answer is no. Records show that the NNPC has never posted an operational surplus since 1999. So how long has the NNPC been carrying these losses incurred with fuel distribution as well as other losses it has been encountering in its operations? Even when the subsidy was in full swing during the last administration NNPC never posted a profit.

In this light, why does the FGN continue to expect huge surpluses from the NNPC when it has clearly shown the inability to run profitably since 1999?

Nigerians are very patient people and are ready to give the government the benefit of the doubt but they don’t want to be taken as fools.

Tell Nigerians, there is a subsidy being borne by the NNPC and in that regard any operating surplus due from the NNPC is unlikely to materialise. Simple!

Alternatively, there is a subsidy and either the FGN provides for it through appropriation or the PMS importation and distribution sector is fully deregulated. You can’t have your cake and eat it.

Nigerians are not stupid. Tell them the truth and they just may support you.

Nuhu is the member representing Kano Municipal Federal Constituency and Chairman, House of Reps Adhoc Panel on the Status of TSA.